No farmland for special economic zones: Kamal Nath

New Delhi: With charges of land-grabbing in the special economic zones (SEZs) being set up in the country, Commerce Minister Kamal Nath Monday said no farmland will be given for such projects, echoing his Congress party's stand.

"The Board of Approval on SEZs has made it mandatory that no proposal for SEZs on prime agricultural land should be cleared," Kamal Nath told reporters here, two days after Congress president Sonia Gandhi called for caution on the issue.

Gandhi had told a conclave of the chief ministers of the Congress-led states in the picturesque hill station of Nainital Saturday that while industry needed land for setting up SEZs, agricultural land should not be diverted to them.

"Farmers must get proper compensation when their land is purchased. Can't the farmers become stakeholders in the projects that come up on the land acquired from them?" the Congress president had queried.

But the opposition still calls it a flawed policy that encourages unscrupulous grabbing of farmland on the pretext of development. "It is the biggest real estate scam in India," alleged Janata Dal-United president Sharad Yadav Monday.

Around 150 SEZs are coming up in the country on 26,800 hectares of land and over 225 more proposals are pending with the government and will cover another 75,000 hectares, according to officials of the commerce ministry.

The SEZs are expected to employ 500,000 people by end-2007 and invest some 1,000 billion, including 250 billion from overseas. The 18 operational SEZs have so far exported 225 billion worth of products and employed 123,000 people.

A strong votary for SEZs in the country, Kamal Nath also said that the Reserve Bank of India (RBI) must keep its promise of treating such projects as engines of India's economic growth for the purpose of extending term finances to them.

"The RBI must ensure that it does not contradict itself," he said referring to a report tabled by the apex bank last month where it praised the SEZ scheme even while cautioning on the potential revenue loss on account of fiscal sops.

The central bank had also recently asked commercial banks to treat SEZs on par with real estate projects for the purpose of loans, which industry complained would increase the cost of such financing.